This article will explain six key frameworks/models that will help you gain a competitive advantage over your competitors through the use of strategic analysis.

Strategic analysis helps organisations to understand their external environment, the competitive landscape, and their own internal resources and capabilities. By conducting a strategic analysis, organisations can identify opportunities and threats, and can develop strategies to achieve their goals and gain a competitive advantage. This can help organisations to be more proactive in their decision-making and to respond effectively to changes in the external environment.

PESTEL analysis

PESTEL analysis is a tool used to evaluate the macro-environmental factors that can impact an organisation. These factors are grouped into six categories: political, economic, social, technological, environmental, and legal. By analysing these factors, organisations can better understand the opportunities and threats they may face and can develop strategies to address them.

Political factors include the stability of a country’s government, its foreign policies, and its regulations and laws. Economic factors include a country’s level of economic development, its level of inflation, and its exchange rates. Social factors include cultural values and beliefs, population demographics, and trends in consumer behaviour. Technological factors include the level of technological development in a country, as well as the availability of technology infrastructure. Environmental factors include the physical environment and natural resources of a country, as well as the impact of environmental regulations and policies. Legal factors include the laws and regulations that govern business operations in a country.

Porters Five Forces

Five Forces Analysis, developed by Michael Porter, is a tool used to evaluate the intensity of competition within an industry. The five forces are: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitutes, and the intensity of competitive rivalry. By analysing these forces, organisations can better understand the competitive landscape in which they operate and can develop strategies to gain a competitive advantage.

Porter’s Diamond

Porter’s Diamond is a framework that explains the factors that shape the competitiveness of a country or region. These factors include the demand conditions in the country or region, the related and supporting industries, the factor conditions (such as the availability of skilled labor or access to raw materials), and the firm structure and rivalry within the industry. By understanding these factors, organisations can better understand the competitive landscape and can develop strategies to gain a competitive advantage.

Strategic Capabilities

Strategic capabilities refer to the resources and capabilities of an organisation that enable it to achieve its strategic goals. These can include tangible resources such as financial resources, physical assets, and intellectual property, as well as intangible resources such as brand reputation and organisational culture. By analysing an organisation’s strategic capabilities, leaders can identify areas of strength and weakness and can develop strategies to leverage those strengths and address those weaknesses.

Value Chain Analysis

Value chain analysis is a tool used to evaluate the activities and processes that an organisation uses to create value for its customers. The value chain consists of primary activities (such as production and marketing) and support activities (such as logistics and procurement). By analysing the value chain, organisations can identify opportunities for cost savings and efficiency improvements, and can develop strategies to create value for their customers.

SWOT Analysis

SWOT analysis is a tool used to evaluate an organisation’s internal and external environment. SWOT stands for strengths, weaknesses, opportunities, and threats. By analysing these factors, organisations can identify their internal strengths and weaknesses, and can also identify external opportunities and threats. This can help organisations to develop strategies to leverage their strengths and address their weaknesses, and to take advantage of opportunities and mitigate threats.

Summary

Overall, these tools are useful for helping organisations to understand their external environment, the competitive landscape, and their own internal resources and capabilities. By using these tools to conduct a strategic business analysis, organisations can develop strategies to achieve their goals and gain a competitive advantage.

Conduct a review of your organisations performance by undertaking performance analysis.


This content can be used as part of the Strategic Business Leader (SBL) module for the Association of Chartered & Certified Accountants (ACCA) examination.
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